Functions of Accounting and Finance in Financial Decision Making

Financial Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Functions of accounting and finance...........................................................................................3
Management accounting techniques............................................................................................4
TASK 2............................................................................................................................................6
a.) Cal. of fiscal ratios..................................................................................................................6
b.) Interpretation and assessment of the financial position of company......................................7
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial decision is a strategic process which is related with making decision in relation
with the financing mix of the company. It is very useful in allocation of funds which in turn
results in making investment, financing, liquidity and operational decision in a systematic and
efficient manner. Financing is referred to as an effective source which is mainly concerned with
the equity of the stakeholders and the liabilities of organization to attain long term development
and objectives of organization. This study will highlight on various accounting functions and role
related with accounting and finance. This study will also evaluate fiscal ratios of organization
with the help of financial statements.
ALPHA ltd. is a manufacturing enterprise in UK. It was established in 1954. ALPHA
supply various components of metal to leading companies of the UK. This company focus on
growing its business activities in the diverse other part of UK.
TASK 1
Functions of accounting and finance.
Financial decision is a strategic process which in turn is accountable for decisions making
associated with stake of the stakeholders and the possession of company to attain objectives of
organization (Schaltegger and Burritt, 2017). Financial decision of the business can be associated
with investing, financing, dividend, liquidity and operations of the business. Decision associated
with managing finances are very important for organisation because it is useful in maximizing
the shareholder value in an efficient and strategic manner. It is useful in taking effective decision
related with the income and expenditure of the business in order to maintain sufficient financial
resources in order to smoothly carry out the operations of the ALPHA Ltd. Financial accounting
is very useful in keeping track of all the financial transactions of the business in order to provide
baseline for the various stakeholders of the company (Collier,2015). It is helpful in interpreting
the financial health and position of the company by assessing the creditworthiness, solvency
position and liquidity position of the ALPHA Ltd. Accounting and finance are very useful in
preparation of an effective budgeted plan which in turn helps in carrying out the business within
the set budget plan. In case of variation take necessary actions to resolute any financial difficulty.
MA plays key role in formulation of plan, organizing, controlling and decision making of
business. The main function of accounting and finance is to help stakeholders of the organization
make strategic decision. It is very useful in interpreting the financial information and

communicating the same to the management and stakeholders of the company in a strategic and
efficient manner (Petersen, Kushwaha and Kumar, 2015). Accounting and finance are useful in
determining the cash flow of the business which in turn is very useful in credit analysis,
estimation of risk and profitability of the company. Finance and accounting plays a key role in
administrating the assets of the business. MA helps in critically examining the financial
performance of enterprise by effectively preparing various internal fiscal reports and records.
Management accounting is useful to evaluate the cost of the ALPHA limited company to
determine the income and expenses of business (Maas, Schaltegger and Crutzen, 2016). It is
useful in determining and evaluating the budget plan which is useful in making various strategic
financial decision. Controlling the activities of the business is one of the common aspect of the
management accounting which helps in reducing the cost of the business and attain higher
economies of scale. This helps in determining the underperforming and outperforming units of
the ALPHA Ltd. It is also useful in evaluating highly profitable departments of the business and
gain higher profitability by reducing operational cost of the company (Kubilay, and
Bayrakdaroglu, 2016). MA is useful in planning as it helps in effectively predicting the future
elements for growth and detecting financial patterns according to the latest market trend (The
Role of Accounting & Finance in Business Management, 2019). Planning helps management
accounting in creating long term policies of organization. It helps in better analysis of fiscal
records to improve the performance and profitability of ALPHA ltd.
Management accounting techniques
MA method is useful in interpretation of financial information and communication of the
same to share holders of business in order to attain growth and objectives of company.
Financial planning: This tool is mainly concerned with attainment of organizational
goals and objectives of the company by effectively evaluating the financial policies of the
company. It helps in maintaining adequate finance in the company which in turn results in
smooth functioning of ALPHA limited company and attain long term sustainable growth.
Analysing financial statements: This tool helps in evaluating various financial reports of
the company in order to forecast the future needs and requirements of the company.
Representation of financial statements in a systematic and timely manner helps stakeholders in
making strategic financial decision.